Southern US cities present the biggest opportunity for Uber and Lyft to change your life

Southern US metro areas present the biggest opportunities for
Uber and Lyft to change your life.

In a big report out on Tuesday morning, Morgan Stanley analysts
Michael Zezas and Adam Jonas look at the impact the proliferation
of services like Uber and Lyft could eventually have on
municipalities — and municipal financing — across the US.

Among many arguments the report makes, the most interesting
is that Southern US cities are ripe for the biggest disruption
amid increasing adoption of ride-sharing services like Uber and
Lyft.

So instead of getting in your car and driving to work, or
replicating the Northeast commuting experience of driving or
walking to a train and heading into the city, more sprawling
metros could enact large-scale, commuter-targeted versions of
what is basically UberPool — Uber's carpool option
where you set a pick-up and destination and your driver is able
to make pick-ups and drop-offs along the way.

The potential candidates for this kind of investment and
experiment, according to Morgan Stanley's list, include
Southern metros like Birmingham, Alabama, Nashville,
Tennessee, Houston, and Atlanta:

Morgan
Stanley

These cities, the firm writes, are more likely to see
benefits from increasing investment in developing networks of
ride-sharing services rather than more common infrastructure
investments like commuter rail lines. They possess the right
density and a relative lack of methods of commuting other than
driving.

Morgan Stanley notes that for each dollar spent on highways,
governments at the federal, state, and local levels spend about
$0.40 on mass-transit projects — read: railways — totaling about
$65 billion each year.

But 75% of Americans drive themselves to work, meaning that
there's a clear gap between infrastructure funding and use.

Investing in infrastructure that improves the ride-sharing
experience within a metro area is likely more beneficial to
existing resident habits than building commuter rail lines. Not
only that, but there's also a chance for more economically
efficient investments given the relatively lower cost of
maintenance for roads compared to railways and airports:

Morgan
Stanley

Here's Morgan Stanley's hypothetical:

In this scenario, autonomous vehicles provided by shared mobility
companies increase the usage of other transportation methods.
Travelers, no longer having to worry about the "last mile" after
arriving at a major transportation hub, embrace "just in time"
pick-ups as shared mobility companies analyze demand and adjusted
resources real time to transportation hubs for fast, cheap, and
almost always there availability just as you arrive.

Cities that currently have little tangible mass transit
infrastructure provide subsidized accounts for shared services to
low income and disabled travelers, saving significant costs over
running their own local systems but maintaining the positive
social externalities that come with public transit.

With less need to fund traditional mass transit, capital is
diverted to roadways, as states and cities revamp old roads or
build new ones to keep up with the increase in autonomous
vehicles and, over time, the need to integrate vehicle to
infrastructure communication. Artery roads with automated
intersections lead to less foot traffic, leading to fewer stops
and storefronts along roads. Residential, shopping, and
commercial districts become segregated and strategically placed
destinations dictated by zoning.

So imagine a future metro area with hubs of walkable, dense
residential and shopping districts connected by easily traversed
spokes full of on-demand, self-driving cars to bring you "off
campus."

Another upshot is that Southern cities have the right weather for
this kind of driving-intensive investment, as snowfall is
relatively rare compared to cities like New York, Boston, and
Chicago — which all have fairly robust rail options.

Morgan
Stanley

"Our SHED metric suggests the urban south may be more conducive
to integration of shared mobility into public transportation
policy," the firm writes.

Morgan Stanley adds (emphasis added):

Southern metropolitan areas tend to be dense enough to support
the economics, but not too dense to the point that mass transit
(i.e., rail) is a better option. An added benefit that is
not captured in our metric is that the weather in these areas is
conducive to shared mobility development. This is because of
limited testing in snow and ice conditions. Commuters in
these regions are also more reliant on cars, and cities offer
expansive road networks.

In contrast, the New York-Newark-Jersey City, NY-NJ-PA MSA
presents a more challenging case. In terms of size, density, and
public transit utilization, no other area comes close. The region
accounts for nearly two-thirds of the planned public transit
infrastructure spending over the next five years. In that
sense, we see traditional transit continuing to play a major role
in New York City and northern New Jersey, regardless of how
shared mobility develops there.

And thinking through this intuitively, the conclusion makes
complete sense.

In New York, for example, taking the train to work in many areas
of the region is effectively the only viable option for
commuting transportation.

But in most other regions, you get in a car and drive by
yourself. Morgan Stanley illustrated this with a chart breaking
out the counts of metro areas by number of people who drive to
work alone: